McDonald Apiary, LLC v. Starrh Bees, Inc., et al

Filing 299

MEMORANDUM AND ORDER denying Starrh Bees' MOTION for Judgment as a Matter of Law (Renewed) 278 ; denying McDonald Apiary's MOTION for Judgment as a Matter of Law (Renewed) and for New Trial 280 ; McDonald Apiary's UDTPA claim, and Starrh Bee's accounting and replevin claims, are dismissed. Ordered by Judge John M. Gerrard. (CCB)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
MCDONALD APIARY, LLC, a
Nebraska Limited Liability Company,
8:14-CV-351
Plaintiff,
vs.

MEMORANDUM AND ORDER

STARRH BEES, INC., a California
Corporation, et al.,
Defendants.
This matter is before the Court on the parties' post-trial briefing on
claims submitted to the Court, McDonald Apiary's motion for judgment as a
matter of law or for new trial (filing 280), and Starrh Bees' motion for
judgment as a matter of law (filing 278).
CLAIM SUBMITTED TO THE COURT
The pretrial order (filing 191) identified several controverted and
unresolved issues, some of which were to be tried to the Court. Filing 191 at
3-13. The Court's order on post-trial briefing (filing 275) directed the parties
to assert any claims they still intended to pursue in their post-trial briefs,
and advised that any claims not asserted would be waived. Filing 275 at 1.
The only claim that has been asserted post-trial is McDonald's claim against
Starrh and the other defendants (collectively, Starrh) under the Nebraska
Uniform Deceptive Trade Practices Act, Neb. Rev. Stat. § 87-301 et seq.
(UDTPA). See filing 284. Accordingly, the other claims tried to the Court,
including Starrh's claims for accounting and replevin, will be dismissed. The
Court's findings of fact and conclusions of law with respect to McDonald's
UDTPA claim follow.
The UDTPA sets forth a lengthy list enumerating the "deceptive trade
practices" actionable under the UDTPA. See § 87-302(a). McDonald's posttrial brief is not particularly helpful at identifying precisely which statutory
practices are at issue, generally asserting that Starrh's "conduct violates
UDTPA, Nebraska Revised Statutes §§ 87-301 to 87-306, specifically
including various deceptive trade practices set forth in section 87-302(a)."
Filing 284 at 17. But McDonald's pretrial proposed findings of fact and

conclusions of law (filing 210) focus on three particular provisions. Filing 210
at 19-20. Specifically,
[a] person engages in a deceptive trade practice when, in the
course of his or her business, vocation, or occupation, he or
she . . . [u]ses any scheme or device to defraud by means of: (i)
Obtaining money or property by knowingly false or fraudulent
pretenses, representations, or promises; or (ii) Selling,
distributing, supplying, furnishing, or procuring any property for
the purpose of furthering such scheme[.]
§ 87-302(a)(16). It is also a "deceptive trade practice" if a party "[c]auses
likelihood of confusion or of misunderstanding as to affiliation, connection, or
association with, or certification by, another," § 87-302(a)(3), or "[d]isparages
the goods, services, or business of another by false or misleading
representation of fact," § 87-302(a)(9). In the absence of other direction, the
Court will focus its attention on those provisions.
McDonald contends that Starrh engaged in deceptive trade practices in
six ways: (1) concealing its intent to compete with McDonald, (2) falsely
representing that it was associated with McDonald, (3) placing hives without
permission from landowners, (4) permitting Susan Mulligan to represent
herself as Starrh's attorney, (5) placing its hives near McDonald's, and (6)
spoliation of evidence. Filing 284 at 17-24. The Court finds no merit to any of
those claims.
CONCEALING INTENT TO COMPETE
McDonald argues that Starrh engaged in a deceptive trade practice by
allegedly concealing its intent to compete with McDonald during its business
relationship with McDonald. Filing 284 at 18. The Court finds no merit to
this claim for two reasons. First, as discussed by the Court in dismissing
McDonald's fraud claim, the Court finds insufficient evidence to prove that
Starrh misrepresented any intent to compete with McDonald. And in the
absence of misrepresentation, the Court finds the evidence insufficient to
show a "scheme or device to defraud" within the meaning of § 87-302(a)(16),
or any other deceptive trade practice enumerated in § 87-302(a).
But even if there was evidence of some sort of deceptive practice, it
would still not warrant relief. The UDTPA provides only for equitable relief.
See State ex rel. Stenberg v. Consumer's Choice Foods, Inc., 755 N.W.2d 583,
587 (Neb. 2008). Specifically, injunctive relief can be sought by a "person
likely to be damaged by a deceptive trade practice of another[,]" and the
Court may order additional equitable relief if necessary "to protect the public

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from further violations[.]" § 87-303. But here, even if Starrh concealed or
misrepresented an intent to compete, there is no evidence that any such
practice is ongoing. Simply put, whatever Starrh did is done: there is no
evidence that McDonald is likely to be further damaged, nor any evidence
that the public requires protection.
IMPERSONATING MCDONALD APIARY
McDonald's claim that Starrh misrepresented itself as being associated
with McDonald is premised on the testimony of John Haller, who testified
that Starrh placed hives on his property despite him telling Starrh's
representatives that they could do so as long as they were "part of Susan
McDonald's deal[.]" But the Court finds the evidence on this claim to be
insufficient to prove Starrh engaged in a deceptive trade practice.
Haller testified that his conversation with Jonathan Gonzalez and his
companions lasted only 60 to 90 seconds. And Haller admitted that his
conversation primarily took place with Jeff Hugen, not Gonzalez, so there is
no clear basis to impute anything Hugen heard to the defendants. But more
fundamentally, there is very little other evidence of any intent to deceive. The
evidence is that Gonzalez was in a truck with a "Starrh Bees" logo on the
side, and that the hives that were placed were clearly marked as Starrh's as
well. Simply put, if Starrh was trying to pass itself off as McDonald, it wasn't
trying very hard. The Court finds the evidence to be more consistent with a
simple misunderstanding than a deceptive trade practice.
And furthermore, as discussed above, there is no evidence to support an
award of prospective injunctive relief. One instance, even if it had been
proved, would be insufficient to establish a course of conduct threatening
damage to McDonald or the public at large.
PLACING HIVES WITHOUT PERMISSION
McDonald's claim that Starrh placed hives without landowner
permission is premised on Gary Binger's testimony. But Binger only testified
that he saw some beehives on his property: he could not say that they were
Starrh's. Nor does any other evidence establish that they were Starrh's. So,
there is clearly not enough evidence to prove that Starrh was responsible for
those hives—or, even if they were Starrh hives, that the placement was
anything other than inadvertent or accidental. There is even less evidence
that the single set of misplaced hives presents an ongoing threat of injury
warranting injunctive relief. And there is absolutely no evidence that
McDonald was harmed in any way, meaning that McDonald is not a proper
party to assert this claim in the first place.

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SUSAN MULLIGAN MISREPRESENTATION
McDonald calls the Court's attention to Susan Mulligan's assertion that
she was Starrh's attorney, which McDonald says Starrh failed to correct. But
as has been the case throughout this litigation, McDonald cannot explain
why Mulligan's representation is a basis for liability. It was certainly not a
deceptive trade practice. It is questionable, to begin with, whether Mulligan's
statement (or Starrh's supposed adoption of that statement) actually took
place in the course of Starrh's "business, vocation, or occupation." See § 87302(a). Nor can the Court find a specific deceptive trade practice into which
Mulligan's statement would fit. The closest would be a "scheme or device to
defraud," but there is no evidence to suggest that Mulligan's statement or
Starrh's silence was even intended to "[o]btain[] money or property by . . .
false . . . pretenses" or "procur[e] any property," much less that either of those
was actually accomplished. See § 87-302(a)(16). Nor, as discussed previously,
is there evidence of ongoing conduct warranting injunctive relief.
HIVE PLACEMENT
McDonald's next argument is something new: while McDonald has
taken issue for some time with Starrh's alleged predatory placement of its
beehives, this appears to be the first time McDonald has tried to fit this
conduct into the UDTPA. It fares somewhat better than McDonald's previous
theories, insofar as there is at least some evidence to support ongoing conduct
that could be enjoined. But the evidence does not support a finding that
Starrh's conduct, even if wrongful in some way, violates the UDTPA.
McDonald does not identify, with any particularly, the statutory basis for its
suggestion that this conduct violates the UDTPA. It certainly doesn't involve
"knowingly false or fraudulent pretenses, representations, or promises." See §
87-302(a)(16)(i). Simply put, there is nothing "deceptive" about it.
McDonald's theory seems to be that Starrh's hive placement is related
to supposed deception in concealing an intent to compete: that is, that the
"deception" was hiding an intent to compete, and the ongoing conduct to be
enjoined relates to hive placement. See filing 284 at 21-23. As explained
above, the Court finds the evidence insufficient to prove that Starrh engaged
in a deceptive trade practice with respect to its intent to compete with
McDonald. The Court also finds the evidence insufficient to prove a
connection between Starrh's previous business relationship with McDonald
and its hive placement in subsequent years: the Court is unpersuaded that
Starrh wrongfully obtained information from McDonald, or has used any
such information to support its hive placement in subsequent years. The
Court finds that McDonald's evidence with respect to Starrh's hive placement
fails to prove a UDTPA violation.
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SPOLIATION
Finally, McDonald's remaining argument is completely new: for the
first time, McDonald is attempting to predicate liability on alleged spoliation
of evidence. McDonald points to Gonzalez' trial testimony that he had his
laptop hard drive wiped in 2015 because it had a virus. Filing 288-3 at 15.
This, McDonald says, was "another deceptive act" and that as a result,
Exhibit 47 itself is "deceptive" and may be fraudulent. Filing 284 at 5-6.
McDonald seems to be arguing, as best the Court can tell, that its
arguments about the weight of the evidence are independently actionable.
McDonald does not cite any authority, and the Court is not aware of any
authority, suggesting that alleged discovery violations can be spun into an
independent claim for relief. Nor is the Court persuaded that a wholly new
theory of recovery can be asserted in post-trial briefing. Had McDonald
suggested at trial that Gonzalez' laptop was the basis for a claim for relief,
Starrh would have had the opportunity to present evidence on that point—for
instance, evidence corroborating Gonzalez' claim of a computer virus. The
Court does not view this theory as having been properly pled or presented to
the Court.
And even if properly presented, there is not enough evidence to support
the claim. The only evidence before the Court is Gonzalez' testimony
regarding what happened to his laptop and why.1 While McDonald questions
his credibility, there is nothing to support McDonald's claim except Gonzalez'
testimony. McDonald cannot meet its burden as plaintiff to prove a UDTPA
violation by relying solely on questions about a defendant's credibility. The
bottom line is that the Court has no evidence that sufficiently calls Gonzalez'
credibility into question. (And, as before, there is no evidence of ongoing
misconduct warranting injunctive relief.)
CONCLUSION
In sum, the Court finds insufficient evidence to prove a UDTPA
violation, under any of the theories advanced by McDonald. The Court will
dismiss McDonald's UDTPA claim.
MCDONALD'S RULE 50/RULE 59 MOTION
McDonald moves for judgment as a matter of law on Starrh's breach of
contract claim. Filing 281 at 1. McDonald moves for "sanctioning in the form
of revoking Starrh's damages awards and entering an injunction" for Starrh's

McDonald also complains about Gonzalez' GPS device, his phone, and other missing
records, see filing 284 at 14-15, but the Court finds that evidence no more compelling, and
the supposedly missing evidence to be far less relevant.
1

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alleged spoliation of evidence. Filing 281 at 2. And McDonald moves for a new
trial on its Junkin Act claim based on alleged instructional error.
In reviewing the sufficiency of the evidence in this diversity case, the
Court applies "the appropriate state sufficiency standard where the issue has
not been raised by the parties and the state and federal standards are
similar." Michigan Millers Mut. Ins. Co. v. Asoyia, Inc., 793 F.3d 872, 877-78
(8th Cir. 2015). Both state and federal law demand substantial evidence to
support the jury's verdict and requires the Court to view the evidence in the
light most favorable to the prevailing party, drawing all reasonable
inferences to its benefit. See, id.; Frank v. Lockwood, 749 N.W.2d 443, 449
(Neb. 2008).
The standard for granting a motion for new trial is higher still.
Michigan Millers, 793 F.3d at 878. The key question is whether a new trial is
necessary to prevent a miscarriage of justice. Coterel v. Dorel Juvenile Grp.,
Inc., 827 F.3d 804, 807 (8th Cir. 2016).
BREACH OF CONTRACT
McDonald's argument with respect to Starrh's breach of contract is
premised on alleged inconsistency of the verdict. Filing 281 at 13. The jury,
McDonald argues, correctly concluded that Starrh breached its contract with
McDonald. Filing 281 at 13. Having reached that conclusion, McDonald says,
"[t]he jury could not, and should not, have found in Starrh's favor on Starrh's
breach of contract claim." Filing 281 at 13. So, "[a]s a matter of law, the jury's
verdict in Starrh's favor on its breach of contract claim cannot stand." Filing
281 at 13.
But a new trial based on an inconsistent verdict is warranted "only if
there was no principled basis upon which to reconcile the jury's inconsistent
findings." SEC v. Quan, 817 F.3d 583, 586 (8th Cir. 2016).2 And in addition, a
party waives any objection to an inconsistent verdict by failing to object to the
inconsistency before the jury is discharged. Williams v. KETV Television,
Inc., 26 F.3d 1439, 1443 (8th Cir. 1994).
So, McDonald has waived its claim of inconsistency by failing to object
before the jury was discharged. See id. And McDonald's argument is also
without merit, because there is an obvious way to reconcile the jury's
findings. McDonald's theory is that because the jury found that Starrh
breached the contract, and Starrh must have breached the contract first, then
the jury should have found in McDonald's favor on its affirmative defense of
In fact, some courts have held that general verdicts reflecting contradictory legal
conclusions are never grounds for overturning a civil verdict in a civil case. See id. at 588
n.3. But the Eighth Circuit has not spoken to that, see id., and it is unneccesary for the
Court to consider the question here.
2

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prior material breach. Filing 281 at 13. But the jury's conclusions can be
reconciled if Starrh's breach was not material.
A material breach of contract will excuse the non-breaching party from
its performance. Gary's Implement, Inc. v. Bridgeport Tractor Parts, Inc., 702
N.W.2d 355, 370 (Neb. 2005). But a minor breach of contract is still
compensable in damages. Id. The obligation of the innocent party depends on
the materiality of the breach committed by the wrongdoer. Sonken-Galamba
Corp. v. Alpirn, 292 N.W. 46, 48 (Neb. 1940).
[I]t depends in each case on the terms of the contract and the
circumstances of the case, whether the breach of contract is so
material as to justify the injured party in refusing to proceed
further and suing for damages for breach of the entire contract,
or whether the breach is severable, giving rise to a claim for
compensation, but not to a right to treat the whole contract as
broken.
Id. The jury here found that Starrh breached the contract and caused
McDonald $5,800 in damages, while McDonald's breach resulted in damages
to Starrh of $206,920. Filing 273 at 2-3. It is entirely possible that the jury
found that Starrh's breach, even if prior to McDonald's, was not material.
And there was substantial evidence to support those findings.
SPOLIATION
McDonald contends that as a sanction for Gonzalez' alleged spoliation
of evidence, the Court should "revoke any judgment entered in favor of
Defendants and enter a permanent injunction against Defendants prohibiting
them from placing their beehives within two miles of McDonald Apiary’s
current and historic apiary locations or upon lands which do not have
sufficient forage to support such hives." Filing 281 at 17-18.
It is unclear to the Court how McDonald makes the leap from alleged
spoliation to the remedy for that spoliation being an injunction regarding
hive placement. It is also not clear to the Court what the legal basis for the
request is: it is not a request, for instance, for a new trial pursuant to Fed. R.
Civ. P. 59. Perhaps it could be construed as a motion for judgment as a
matter of law pursuant to Fed. R. Civ. P. 50(b), but it is hard for the Court to
see how that could be the case given that Rule 50(b) permits a "renewed"
motion for judgment as a matter of law, and McDonald cannot renew a
request it never made in the first place.
The basis for McDonald's spoliation argument is found in Gonzalez'
trial testimony on December 14, 2016. Filing 288-3. But McDonald did not

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ask for sanctions, or a mistrial, or a directed verdict based on spoliation, on
that day or the two remaining days of trial after that. McDonald did not ask
for a jury instruction regarding spoliation. In sum, McDonald did nothing to
advance its spoliation argument until its post-trial briefs. And that is simply
too late. See Nassar v. Jackson, 779 F.3d 547, 551 (8th Cir. 2015).
Furthermore, the Court does not find sufficient evidence to establish
sanctionable spoliation. Spoliation requires (1) a finding of intentional
destruction indicating a desire to suppress the truth, and (2) a finding of
prejudice to the opposing party. Burris v. Gulf Underwriters Ins. Co., 787
F.3d 875, 879 (8th Cir. 2015). Even assuming prejudice, the Court is
unpersuaded that evidence was intentionally destroyed with desire to
suppress the truth. The Court has no evidentiary basis to disbelieve
Gonzalez' testimony regarding his computer and the other evidence that was
mislaid. Perhaps Gonzalez is an imperfect record-keeper (as is McDonald, for
that matter), but the evidence does not establish a warrant for the harsh
sanctions associated with spoliation—much less the extraordinary sanctions
sought by McDonald.
JUNKIN ACT CLAIM
Finally, McDonald argues for a new trial on its Junkin Act claim as a
result of the Court's refusal to give McDonald's proposed jury instruction on
that claim. Filing 281 at 18. And McDonald "further renews its motion for
judgment as a matter of law on all grounds." Filing 281 at 18. The Court will
deny those requests for the reasons previously stated on the record.
McDonald's Rule 50/Rule 59 motion will be denied.
STARRH'S RULE 50 MOTION
Starrh moves for judgment as a matter of law on two claims:
McDonald's negligence claim, and McDonald's UDTPA claim. The Court will
deny Starrh's motion on both points.
First, Starrh argues that the evidence was insufficient to permit the
jury to find causation on McDonald's negligence claim, or determine damages
with reasonable certainty. For the reasons the Court has previously
explained on the record, the Court disagrees. Proof of damages to a
mathematical certainty is not required; the proof is sufficient if the evidence
is such as to allow the trier of fact to estimate actual damages with a
reasonable degree of certainty and exactness. Pribil v. Koinzan, 665 N.W.2d
567, 572 (Neb. 2003). That standard was met here.
Finally, Starrh also argues for judgment as a matter of law on
McDonald's UDTPA claim. That will be denied: while the Court as the trier of
fact has found in Starrh's favor on that claim, there was at least sufficient

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evidence on one of McDonald's theories—the theory based on Starrh
representing itself as associated with McDonald—to warrant submission of
the claim, even if the Court found the evidence insufficient on the merits.
Accordingly, Starrh's Rule 50 motion will be denied.
IT IS ORDERED:
1.

McDonald Apiary's motion for judgment as a matter of law
or for new trial (filing 280) is denied.

2.

Starrh Bees' motion for judgment as a matter of law (filing
278) is denied.

3.

McDonald Apiary's UDTPA claim, and Starrh Bee's
accounting and replevin claims, are dismissed.

Dated this 3rd day of April, 2017.
BY THE COURT:

John M. Gerrard
United States District Judge

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